Employee Compensation: Salary, Benefits & Bonuses Explained

I currently have 130 employees working across my four brands.

I hired each one personally, and in my entire 15-year career I’ve only had 10 employees quit or be fired — and as far as I know, no one ever left because the compensation was better somewhere else.

So how do I build teams that employees love to work for?

By understanding that compensation goes far beyond what you pay somebody.

In this post, you’ll learn how I compensate every employee on my team, from a brand new hire to my top C-level executives, including:

• How I determine starting salary
• How I build teams economically
• What benefits my companies offer
• How I bonus employees and executive officers
• How I create a culture that keeps my 130+ employees happy

And I share my system for promoting employees in-house, so you avoid paying $30,000 premiums on the open job market.

Let’s Start With Company Structure

If you structure your business like I do, then at the very top you have your C-level officers (CMO, CTO, COO, etc.).

Next, you have team leaders for each department like Social, Copy and Customer Support.

Then you have standard employees who work in those departments.

Each tier is compensated differently based on their experience level and the market rate for that position.

Use Market Rates To Determine Salary

Generally speaking, there is a market rate for the salary of every role on your team.

The market rate can vary by $30,000 based on experience, but you can estimate any industry standard salary by looking at current job postings on Indeed.com and other job boards.

For example, an inexperienced person in the role of a social media manager might earn $50–60,000 per year while a very experienced person might earn $80–90,000.

You Don’t Need To Pay A Premium For Experience

Hiring experienced employees is the most expensive way to build a team.

Instead, I use my customer service department like a training ground to educate new hires on how the business works, and then I promote from within.

This allows me to build up their skill level myself, so when they do reach senior-level positions their salaries are below industry standard and I can be more generous with raises going forward.

It’s a more economical way to build a team than hiring experienced people from the start, but both methods work and you may need to do a mix of both.

You can grab my free job listing template in my other blog post: The Hiring Strategy I Used to Build My 100-Person Team.

Compensation Is More Than Annual Salary

For us, compensation is the combination of many factors: salary, benefits, bonuses, career development, culture and equity incentives.

When it comes to salary, I try to be really generous for the job position they’re playing and the experience they have.

So if you start in customer support with zero experience, I’m still going to start you between $40–45,000 a year plus bonuses.

Then on top of that base salary, I’ll also give you a generous benefits package.

Benefit Packages For All Employees

I understand that not every company is big enough to be able to offer benefits, but here are the ones that we offer:

• Healthcare ($600 per month per employee)
• Paid Holidays
• Paid Sick Leave
• Half-day Fridays
• 401(K) Matching Contribution
• Year-end Bonus (3% of salary after tax)

We also do book clubs, bi-monthly cooking lessons, and all kinds of events and prizes throughout the year, too.

And because my businesses are virtual, you could add “Work From Home” to this list of benefits as well.

Bonuses For Standard Employees

For every employee on the team except for the C-level folks, we do a general bonus every year based on salary.

As long as the company turns a profit, I’m paying this.

The amount of the bonus last year was 3% of employee salary after taxes — so we grossed it up to account for taxes to make sure their take-home was the full 3%. I distribute these around December 10, so they can use it to offset their holiday shopping, too.

(Annual bonuses for my C-level team are goal-based; I’ll cover those a little later.)

Beyond financial incentives, we also help you develop new career skills when you become interested in switching roles.

Invest In Your Employees

Remember when I said that I prefer to hire within the company when possible?

Well, I’ve promoted a lot of employees from the Customer Support Department to more advanced roles in social media, email marketing, copywriting and project management.

This is actually how I found my Director of Social Media Laura Palladino. She started as a customer support rep and became one of the top social media managers in the game. Now she trains other social media managers in Train My Social Media Manager and Smart Social.

You can have this conversation at yearly check-ins by asking your employees if there’s any area of the business they’d like to learn about next.

People don’t want to feel stuck at their jobs. This is how I help my team ascend and benefit from their growth at the same time.

Make Culture Part Of Compensation

When I talk about culture I’m talking about how it feels to work for my brand, and there are three things about my own company culture I want to highlight here.

The first thing is something I say at the beginning of every year, at every quarterly check-in, and very frequently on team calls…

1. I want you to have a good time working here. I want it to be fun. I want you to enjoy yourself.

If you don’t have a comfortable place to work then I’ll buy you a desk, I’ll buy you a chair, I’ll buy you a laptop. I want to set you up as best I can to be successful at your job.

2. I will (almost) never ask you to work more than 40 hours a week if you’re not in a leadership role. If I do ask you to work overtime, I will pay you extra for it.

When you work for me, I want you to have a nice work-life balance so you enjoy your time at work as much as possible. You can’t do that when you’re working crazy hours.

3. I give you autonomy within your role to improve how things are done.

If you see a way to enjoy your work-life more, to make our products better, to serve our customers better — please tell me. I want to create a culture of optimization at every level of the business, and I will encourage you to be an entrepreneur from any role you’re in.

But culture doesn’t matter if hours are long, if your employees feel micromanaged, and if they’re not paid well.

(I talk more about how to build company culture in my other blog post: 3 Rules to Build a Winning Team.)

How I Compensate C-Level Officers

Along with their base salary, I incentivize my leadership team with annual bonuses to guarantee progress in the business.

Together, the leadership team and I set three S.M.A.R.T. goals for the year for every manager. SMART is an acronym for Specific, Measurable, Achievable, Relevant, Time-based.

If the company reaches its revenue goals and they complete their individual goals, they get a bonus of 5–20% of their annual salary, depending on their position.

Each of their three goals represents 33% of that bonus, so even if they complete two of the three they still earn 66% of the maximum bonus.

Equity Incentives For Top Employees

The final part of our compensation package is an equity incentive called Phantom Stock, and it is reserved for my highest-level employees.

Under this agreement, I give certain employees an equity bonus in addition to their annual bonus in the event that I sell a majority stake of the business.

Phantom stock is better for business owners than actual stock because it allows you to give an employee the financial reward of owning stock without losing shares of the LLC.

For example, with phantom shares you can guarantee an employee receives a percentage of the profits from the sale (as long as they remain employed) — but they have no voting rights and you don’t have to distribute profits until you sell the business.

There you have it — that is how I compensate the 130 employees who work across my 4 brands, including salaries, benefits and bonuses.

To learn more about the systems and processes I use to build and scale businesses, check out my 3-part training:

The 90-Day Business Scaling Framework (For Brands of Any Size).